Standard lease is draconian

8 June, 2016

Justin Cumberlege, a partner in Cripps LLP’s healthcare team, advises GP practices to think carefully before signing a lease with NHS Property Services.

You would think NHS Property Services, a company owned by the Secretary of State for Health, would be on the GPs’ side when agreeing lease terms. Don’t be fooled.

NHS Property Services now owns primary healthcare properties previously belonging to Primary Care Trusts and many new properties to be developed as primary healthcare premises.

The lease it uses, its ‘standard form of lease’, is more draconian than most offered by specialist medical centre developers. After months of negotiations, and a side letter for comfort, we managed to agree for a client a form of lease that was somewhere near acceptable.

However, as announced on 25 May, following negotiations between NHS Property Services, NHS England and the BMA, some recognition of the way GPs are funded has been introduced into the 72-page lease. The number of footnotes demonstrates there is no ‘one size fits all’, but even where options are not given, GP practices should be wary of suggested provisions.

First, consider your circumstances. Your practice may already have security of tenure, allowing occupation on the existing terms. If these are unwritten, it will be a matter of custom and practice, and unlikely to be as harsh as the terms in the proposed standard lease.

While the standard lease acknowledges rent should not exceed the rent reimbursement, and introduces an important concession that the lease can be ended if the GMS/PMS contract is terminated, there are other terms to be wary of.

For example, restricting opening hours to 8am – 7pm on working days reduces the opportunity to use the premises for health and social care. Further, use as a dispensing pharmacy is prohibited.

There is a full repairing obligation, meaning the practice must put the premises in repair, and keep them in repair, unless otherwise agreed. The practice has to pay for the schedule of condition, while a BMA footnote urges tenants to carry out a full report on the services in the building (sound advice).

There is a requirement to use NHS Property Services contractors for maintenance. The practice is permitted to have some input into which services are provided and under what terms – so be proactive in agreeing these and carve out as many as possible for your own contractors. Beware, though, if the work is not done, the landlord can do it and pass the costs to the practice.

The standard form of lease does at least come with a warning that it is a template only and legal advice should be sought. So, if you receive one, contact Cripps’ property healthcare team for help in understanding your legal rights if you are already in occupation of the premises, or advice on the terms being offered if you are moving into new premises.

Contact Justin Cumberlege at justin.cumberlege@cripps.co.uk or call 01732 224027.